The government is identifying the second group of about 70-90 public sector undertakings (PSUs) which will be given greater autonomy in line with the policy announced recently for the nine public sector undertakings the navaratnas.
The PSUs will be chosen on their profitability parameters, which would include gross and net profits as well as returns to capital employed, among other financial indicators.
The draft note, which has been prepared by the industry ministry, is currently awaiting the nod of the minister for industry Murasoli Maran, following which it will go to the cabinet for approval.
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The policy and the names of the PSUs chosen will be finalised in about a week, Maran told Business Standard. Elaborating on the proposed policy, the minister added: we would like to expand the navaratna concept to other profit-making PSUs. They will be given greater autonomy, but the scale would be smaller than that announced for the nine leading PSUs. All the PSUs chosen will have one-third board representation comprising eminent personalities chosen from the private corporate sector who will function in non-executive capacities.
These will also be given greater access to domestic and overseas capital markets, and the investment ceiling beyond which they need the mandatory clearance from the Public Investment Board (PIB) will also be relaxed.
However, the minister clarified that the degree of financial freedom granted to the chosen second-rung PSUs will be less than that granted to the navaratnas. We must distinguish between the nine leading PSUs and these ones, he said, adding in a lighter vein: We will probably call them stars or any other name chosen from our Puranas.
Maran also stated that to make the PSUs more efficient and viable, the government was currently looking at ways to incorporate changes in the memorandum of understanding (MoU) system. A proposal to include more pertinent financial parameters in the MoU that each PSU signs with its administrative ministry is currently under consideration.
PSUs should justify their existence, they should make profits. Their attitude should change from statute to market, from need to demand, announced the minister at a brainstorming session held in the Capital with the Union secretaries, chief executive officers and heads of various public sector units.
The meeting was called by the industry minister to discuss ways and means to strengthen the PSUs by eliminating policy constraints. Putting to rest the various concerns expressed on the future of the PSUs, Maran stated: I want to show the world that PSUs can be a success in India. There is no question of closing down the public sector in India. The decisions must be made on the social and economic merits of the case based on practical judgements and not on doctrines.